Yet as government agencies are forced to devote more resources to unsustainable and overly generous pension promises to their employees, a very different kind of retirement crisis is looming for people who work in the private sector. About half of all Americans employed outside government have virtually no retirement savings.
A declining number of companies offer traditional pension plans, and an increasing number don't offer or have ceased contributing to tax-deferred savings plans. In
Aside from payroll withholdings for
By some estimates, the difference between U.S. household savings and the amount people need to maintain their present standard of living in retirement is at least
That isn't so surprising considering that the incomes of middle- and working-class families have been stagnating for a generation. People living paycheck to paycheck aren't in any position to build nest eggs for their retirement years.
But they can't stop the passage of time either.
Every day, roughly 10,000 Americans turn 65. By 2030, when the last of the baby boom generation reaches retirement age, one in five Americans will be at least 65. Today, it's about one in eight.
Without adequate savings, many baby boomers will have no choice but to continue working. To retire, others may settle for a drastically reduced standard of living.
The problem is obvious. The solution is not.
Just as most of the actions aimed at curbing the cost of public-employee pensions have produced only marginal savings for taxpayers, the most prominent proposals to assist private-sector workers would have limited effects, at least for people approaching retirement in the next decade.
In his State of the Union address, President
But participants would be limited to
The biggest obstacle to saving for retirement is insufficient income. Neither of these plans change that. But they would make it easier to save, which might get some people started on the path to a comfortable retirement.
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